DFF - Agrofusion WC Loan

Location:

Ukraine

Project number:

52089

Business sector:

Agribusiness

Notice type:

Private

Approval date:

28 Jul 2020

Status:

Cancelled

PSD disclosed:

14 Aug 2020

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

The provision of a senior secured revolving loan of up to €10 million to Farm Enterprise "Organic Systems". The Loan will be used to finance the increased working capital needs of Agrofusion Group. This project was approved in the context of the Bank's response to the COVID-19 pandemic.

Project Objectives

The operation will provide necessary liquidity to finance the current farming and processing campaign until November 2020 and beyond. Securing sufficient working capital financing will be crucial for Agrofusion Group to achieve sustainable production volume under COVID-19 environment. Therefore, it will help the Group to preserve its investments, which were part of the original project between the Bank and Agrofusion approved in 2017. 

Transition Impact

ETI score: 60

The project will help preserve Agrofusion's ability to meet the transition impact that is expected to be achieved as part of the original engagement with the company approved in 2017. The original transition impact objectives are as follows:

(i) Improving standards in terms of resource efficiency (Best Available Techniques compliance and water savings);

(ii) Demonstration of new replicable activities through the promotion of organic farming in Ukraine;

(iii) Skill transfer thanks to trainings offered to young people about modern farming techniques and technologies;

(iv) The recruitment for permanent jobs in rural areas.

The new engagement is associated with the PTI score of 60 of the original transaction.

Client Information

ORGANIC SYSTEMS FE

Farm Enterprise "Organic Systems", incorporated in Ukraine, is one of the main operating companies of Agrofusion Group. 

EBRD Finance Summary

EUR 10,000,000.00

Total Project Cost

EUR 10,000,000.00

Additionality

The EBRD financing is provided in the extraordinary circumstances of the COVID-19 crisis that have impacted the economy and limited new lending opportunities in the markets. Local banks for instance are reducing their working capital limits for the existing clients. Specific triggers for the Enhanced Additionality Approach do not apply.

Environmental and Social Summary

Categorised B (2019 ESP). Financing of working capital for an agribusiness company is associated with site-specific E&S impacts that can be managed via implementation of a good environmental and social stewardship practices. The Borrower is an existing EBRD Client with a good track record on previous projects operating robust, certified, Environmental and Social Management Systems, and with the capacity to implement the Project in line with the PRs. E&S assessment for the current Project included review of current ESAP status, which demonstrated that the Company is compliant with national E&S regulatory requirements and has fully implemented all the required E&S mitigation measures under the ESAP. No new E&S issues arise from the new transaction and the Client will continue to maintain its Environmental and Social Management Systems and E&S compliance in line with the EBRD ESP. The Borrower has recently introduced a COVID-response plan aimed at minimization of financial, operational, health and safety and social risks. No redundancies or adverse changes in the working conditions due to COVID impacts are expected. The Bank will continue monitoring of E&S compliance through the review of annual environmental and social reports.

Technical Cooperation and Grant Financing

The Project will have a Technical Cooperation (TC) component provided by the Japan-EBRD Technical Cooperation Fund. The TC funds will partially cover the legal due diligence costs.

Company Contact Information

ORGANIC SYSTEMS FE
olga.zhukova@inagro.ua
+38 0512 58 79 01
+38 0512 58 79 01
www.inagro.ua
34 Prospect Myru, 54034, Mykolayiv, Ukraine

PSD last updated

14 Aug 2020

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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